Orange County FHA, VA & First Time Buyer Loan Information: Orange County Home Buyers will Benefit from Extended and Expanded Home Buyer Tax Credit

My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

Its official! Orange County, CA homebuyers will have more time to purchase a home and take advantage of the First Time Home Buyer Tax Credit. Set to expire on November 30, 2009, the tax credit was just extended through June 30, 2010, and includes some important revisions. Also, the tax credit is not just for first time buyers anymore. Move up buyers can get a tax credit of up to $6,500.

Orange County First Time Buyers

The tax credit can be as high as $8,000, or 10% of the purchase price, whichever is lower. Since there aren't many homes under $80,000, 99% of Orange County First Time Buyers should qualify for the whole $8,000, provided they also meet other qualifying criteria. The tax credit will be $4,000 for those buyers who are married but filing separately. For unmarried co-buyers, either one person can claim the entire tax credit or they can split the credit. A First Time Buyer is someone who has not owned a home within the past 3 years prior to the new purchase. The IRS may ask for proof, which is your Final Closing Statement, or HUD 1.

Move up buyers can now get up to a $6,500 tax credit, or 10% of the purchase price, whichever is lower. There are a few caveats here to remember. The move up buyer must of owned their current home for at least 8 years and lived in the home consecutively for 5 years out of those 8 years. The current home must have been a primary residence.

For those who are a member of the "Uniformed" services, or member of Foreign Service of the United States, or employee of Intelligence Community (any CIA first time buyers out there?), the tax credit has been extended through June 30, 2011. The sales contract must be signed by April 30, 2011. To qualify for this extension, these buyers must qualify for the Extended Duty exception, defined as "Official Orders outside the United States for at least 90 days during the period 12-31-2008 and May 1, 2010.

Important Dates to Understand

The current tax credit was to expire on November 30, 2009. This meant that the escrow needed to be closed by November 30, which also meant that to have a realistic shot at closing in time, the purchase contract needed to be negotiated and signed at least 30 to 45 days prior to November 30. The new credit expires on June 30, but the purchase contract need to be signed by April 30, 2010. This will take some pressure off of lenders, escrow, and title since buyers will not being trying to push through a 15 day escrow to get their $8,000 tax credit.

Higher Income Limits to Accommodate Orange County Home Buyers

The current Tax Credit program had an income limit of $75,000 for single home buyers and $150,000 for married couples. The new limits are $125,000 for single filers and $225,000 for married couples. This will help quite a few Orange County home buyers.

Other Things to Know About the Tax Credit

Maximum sales price for eligibility is $800,000

To prove eligibility a copy of the HUD 1 (Final Closing Statement) must be attached to IRS 5405 "First Time Homebuyer Credit" form.

If the home is sold within 36 months of acquisition, the tax credit must be paid back in it's entirety.

Ineligible Home Buyers - non-resident aliens, properties disposed of before end of the year, if property ceases to be the principal residence before the end of the tax year, if property is acquired from a person who is "related" to the home buyer or if married, the homebuyer spouse, buyer can't be less than 18 year old.

Type of Homes that Qualify for the Credit

Single Family

2-4 Family, as long as at one unit is owner occupied.

Townhomes and condo's

Houseboats

Mobile and Modular homes

New Construction

Inventory has been low in Orange County for much of 2009, making for a frustrating experience for those First Time Buyers trying to beat the November 30 deadline. Now, with the extension, Orange County First Time home buyers will have extra time to find a home to purchase. Of course, one of the first things to do prior to looking for a home is to get PreApproved for a loan. Approximately 30% of all loans in Orange County in 2009 have been FHA. This is because FHA only requires 3.5% down payment. But before an offer will be accepted by most sellers, the buyers must talk to an Orange County Direct FHA Lender.